Chicago's year in innovation extends far beyond the startups and companies that raised Series As, Bs, and Cs and filed any sort of Form D.
In 2016, the city played the buyer, not the bought. It birthed three new startups from founders that have recorded billion dollar exits. It leaned into its strongest industries, from logistics to financial services. It brought back serial entrepreneurs that once left for the coasts. One of its fastest-growing startups acquired its biggest competitor. One of its most promising startups raised a seed round. It balked on driverless cars.
Countless individuals and entities influenced and shaped the Chicago ecosystem in 2016, for good or bad; there's no single 'Top 10' list that would do it justice. So, instead, we decided to spotlight the 26 people, businesses, trends and topics that helped define the past twelve months.
This is a look back at the city's year in innovation, from A to Z.
A: Autonomous Driving: Chicago's at a crossroads when it comes to driverless cars. In September, two alderman introduced a proposal that would ban driverless cars for testing and personal use on city streets. In response, Consumer Technology Association CEO Gary Shapiro slammed the ordinance, suggesting that it "will leave Chicago behind other cities in benefiting from a self-driving future." 2016 has shown us that autonomous driving is coming faster than anyone predicted. This year, Chicago put itself at a disadvantage in regards to positioning itself as a destination for driverless innovation. It's time to catch up.
B: Boomerang: Anecdotally, you're starting to hear more and more about a Chicago tech "boomerang effect." In other words, tech workers who've left the city but are now returning to Chicago to start their next businesses or join an existing high-growth tech company. Some high profile "boomerangs" in 2016 include new Jellyvision CTO Brian Walker, Nurture Life, a kids meal delivery startup founded in Silicon Valley, and Gunslinger Studios, a developer of mobile games launched by a West Coast gaming veteran.
C: ContextMedia: In November, ContextMedia, one of the city's fastest-growing, most high-profile startups, acquired its top competitor AccentHealth, becoming the largest healthcare decision platform at the point of care. Interestingly, AccentHealth tried to buy ContextMedia in 2010, with the latter passing on the deal. My, what a difference six years (and a big 2016) can make.
D: The Departed: Let's pour one out for the startups that are no longer with us. In May, fantasy sports app Sportslock shut down its app and asked players to withdraw funds amid growing uncertainty in the daily deals space. Brunch, a group messaging app that launched in 2015 with a number of high-profile Chicago tech backers, shuttered. Also, music licensing platform Music Dealers abruptly shut down earlier this year and Sprig, a San Francisco-based on-demand food delivery service, pulled out of Chicago in April. Finally, four years after being acquired for $429M by Walgreens, Washington-based drugstore.com closed.
E: Exits: In 2014 and 2015, Chicago tech companies registered a combined $7 billion and $8 billion in exits respectively, thanks in part to the $1B+ acquisitions of Cleversafe and Fieldglass, as well as Trustwave's $800M deal. However, while these string of monster exits were being announced (and mostly celebrated), a glass-half-empty opinion surfaced, suggesting that these deals actually embodied "what's wrong" with Chicago tech. (The idea was that, by being "vulnerable to takeovers," Chicago was failing to create the transformational businesses that play the acquirers rather than the acquired).
At the time, we loudly disagreed with this opinion - a healthy exit is unquestionably a good thing for an ecosystem, especially a deal like Clefersafe's, which created upwards to 80 local millionaires.
Yet, IF you shared that take, then 2016 was a great year for you. Though a down year for exits - outside of LinkedIn's acquisition of PointDrive and Valence Health's sale to Evolent Health - Chicago tech played the acquirer over the past 12 months, including ContextMedia acquiring its main competitor AccentHealth, Allstate paying $1.4B for SquareTrade, Cars.com acquiring DealerRater, Morningstar acquiring Pitchbook, Groupon acquiring Living Social, Grubhub acquiring several delivery startups, and GE Transportation acquiring Iders.
F: FinTech: Thanks to the Chicago Board Options Exchange (CBOE) and the Chicago Board of Trade (CBOT), the city has been a hub of financial innovation for nearly a century. Today, a handful of companies and organizations, notably Braintree - which has grown by 25x since being acquired by Paypal in 2013 - and Avant, M1 Finance, Tastytrade and FinTEx - are continuing to cement Chicago's legacy as a center for fintech.
G: Genevieve Thiers: Following the results of this year's election, Sittercity cofounder Genevieve Thiers teamed up with former Rahm Emanuel campaigner and staffer Ellie Bahrmasel on The Rise Movement, a new progressive political organization.
H: Hyde Park (VP & A): In August, Hyde Park Venture Partners closed its $65 million second fund, four years after launching its debut fund at $25 million. HPVP made 32 investments through its first fund and has already done more than 20 deals in fund two. Meanwhile, Hyde Park Angels continues to be one of the most active angel networks in the country, investing in a handful of Chicago startups including Parkwhiz, Occasion, TransparentCareer, Regroup Therapy and more.
I: Inno on the Road: While we're primarily focused on Chicago, we also have our eyes on ALL of the startup and tech activity happening throughout the entire Midwest. That's why, this Fall, we launched our Inno on the Road series and traveled to two neighboring ecosystems, Milwaukee and the Twin Cities, and spotlighted a handful of the people and companies that are driving their innovation economies forward. Many more to come in 2017.
J: Jio: Jio, the makers of tiny, long-lasting wearables, blasted out of stealth in February and went on to raise $1.2 million in June. The startup, which is from a handful of high-profile Motorola veterans, was also accepted into Techstars' summer class.
K: Kickstarter: The popular crowdfunding portal continues to be a boon for aspiring Chicago entrepreneurs and makers, helping a number of local early-stage businesses secure the capital needed to execute, including Ullo, the Levitating Glass, the Modo Bag, Mumzy, and many, many more. Also, Kickstarter cofounder and Chicagoan Charles Adler launched his latest endeavor this year, Lost Arts, a Goose Island-based co-working space for creatives.
L: Logistics: In 2016, Chicago continued to position itself as a hub for supply chain innovation, with logistics startups Project 44 and Four Kites raising $10.2 million and $13 million respectively. Also, in the realm of helping people get from A to B, Parkwhiz raised a $24 million Series C, Spothero expanded into more markets, and Parqex closed a $1.2 million seed round.
M: Marketing Tech: 2016 was a big year for fundings of Chicago's marketing tech startups, including 4c Insights raising $26 million, Rise Interactive raising $12.3 million, Signal raising $30 million, Vibes raising $45 million, ConceptDrop raising $1.1M, and Sprout Social raising $42M.
N: Next Wave: In 2016, three separate startups were launched by local serial entrepreneurs that have recorded exits of over a billion dollars - Groupon's Eric Lefkofsy (Tempus), Fieldglass' Sean Chou (Catalytic), and Cleversafe's Chris Gladwin (Ocient).
O: OCA: In the last two and a half years, companies that OCA has backed have collectively sold for more than $2 billion. This year, OCA invested in over 10 startups, LogicGate and Levyx.
P: Podcast: This year, we produced nearly 30 (WOAH!) one-hour episodes of the Chicago Inno Show, which you can listen to on Soundcloud, Stitcher, and iTunes.
Q: Q4: 2016 will be a down year for venture capital investment in Illinois, despite $698 million raised through Q3, the best three-quarter start the state has seen 2001. So, why the down year? Q4. 2014 and 2015 capped off the year with record quarters, raising $469 million and $533 million respectively. 2016? Not so much. The final quarter of the year will most likely top out at around $200 million.
R: Returns: A June PitchBook analysis found that Chicago companies offer the highest VC returns of any startup hub in the ENTIRE United States. The private equity and VC funding database found that 81 percent of the Chicago exits they measured had a 3x to 10x return (the term they use is Multiple on Invested Capital, or MOIC, being exit value/total VC raised). That's the highest of 12 startup hubs PitchBook surveyed, and nearly 10 percent higher than the Bay Area.
S: SMS Assist: In June, SMS Assist, a provider of property management software, raised $150 million, becoming the city's latest Unicorn.
T: Tweetsense: A LOT of people were loud wrong about two of the biggest surprises of the year, Trump and Brexit. However, Tweetsense, a sentiment analysis startup founded by two UIUC students, were right about both from the very beginning. Tweetsense correctly predicted the outcomes of the two elections, using a combination of natural language processing and machine learning to glean public opinion insights from social media.
U: UIUC Tech Alumni: Although it's 135 miles away, the University of Illinois at Urbana-Champaign is responsible for developing the most entrepreneur alumni in the greater Chicago area. LinkedIn data showed as much earlier this year, putting UIUC ahead of UChicago, Northwestern, and DePaul. Meanwhile, a recent report by venture capital database Pitchbook affirmed that the school produces the most undergraduate venture-backed startups out of any Illinois university.
Venture: Despite the fact that venture capital investment will be down in Illinois for the first time year-over-year since 2013, it's been a strong 12 month for the ecosystem. In fact, Illinois is on pace to have every quarter at or over $200M in VC, the first time that's happened in-state since the dot com era.
W: WGN (And Where Are We): Are you reading this list thinking to yourself, "how did I miss all of this great stuff?" Well, if you are, be sure to sign up for our daily newsletter The Beat, follow us on Twitter and Facebook, and continue to check out this site. But if you're a one medium-kind-of-person, you can also check us out every Monday on WGN's Wintrust Business Lunch.
X-Cube: In November, we profiled the best-selling X-Cube, a Chicago-made logic puzzle that's like a Rubik's Cube on steroid.
Y: YCharts co-founder Shawn Carpenter: Shawn Carpenter, who co-founded financial data research platform YCharts, launched his latest startup this year, RepIQ, aims to bring big data to sales reps.
Z: Zero Percent: Last year, $20 billion worth of prepared food was taken to the landfill. Chicago-based Zero Percent, a platform designed to help businesses and restaurants move surplus food, is tackling this problem and has already served more than 1.2 million meals in the city.
(Images via Chicago Inno and Pexels)
